Jasmine Chavez, a crew member aboard the Quantum of the Seas cruise ship, waves to her family during a cell phone conversation after disembarking from the ship at Marine Park on Friday. (Mark Sabbatini / Juneau Empire)

Jasmine Chavez, a crew member aboard the Quantum of the Seas cruise ship, waves to her family during a cell phone conversation after disembarking from the ship at Marine Park on Friday. (Mark Sabbatini / Juneau Empire)

Cruise industry says Marine Passenger Fees being spent illegally as Assembly members give initial OK to $21M list

$5M for shore power, $3M for Capital Civic Center, $2M for Marine Park improvements among projects

Some of Juneau’s plans for spending $21 million in Marine Passenger Fees during the coming year are getting a rough reception from cruise ship industry representatives who argue funds are being illegally spent for purposes beyond the defined “infrastructure and services that further the marine enterprise/operation of such vessels.”

The list of items getting such funds — including $5 million for shore power infrastructure and $3 million toward a new Capital Civic Center — was approved by the Juneau Assembly’s Finance Committee on Wednesday night. While there was debate among Assembly members about some items, notably how much to provide the civic center, the more contentious battle still to be resolved is industry officials questioning the intentions of local officials about a list of other projects.

“It was our hope that the objections we raised would be considered and that they would be taken in the manner with which they were shared — in good faith,” wrote Renée Limoge Reeve, vice president of government and community relations for Cruise Lines International Association (CLIA), in a May 2 letter to City Manager Katie Koester and Tourism Manager Alexandra Pierce. “Unfortunately, despite the best of intentions, we reached an impasse. While CLIA maintains that the projects identified clearly fall outside the law, we understand you will be moving forward with them.”

A similarly terse letter, with additional details about the specific projects CLIA objected to, was sent April 3 to Pierce. Among the items listed are $2 million for Marine Park improvements, $1 million for Capital Transit, $1 million for public wifi, $1 million for a clean energy loan and incentive program for tourism-related businesses, and $500,000 toward an Archipelago Museum at Elizabeth Peratrovich Plaza.

Alaska Native dancers perform during the Maritime Festival on May 4 at Elizabeth Peratrovich Plaza, located in an area between the Marine Parking Garage and Taku Dock formerly known as the Archipelago Property. Among the projects proposed using Marine Passenger Fees is an Archipelago Museum in the undeveloped space that was originally proposed several years ago. (Mark Sabbatini / Juneau Empire)

Alaska Native dancers perform during the Maritime Festival on May 4 at Elizabeth Peratrovich Plaza, located in an area between the Marine Parking Garage and Taku Dock formerly known as the Archipelago Property. Among the projects proposed using Marine Passenger Fees is an Archipelago Museum in the undeveloped space that was originally proposed several years ago. (Mark Sabbatini / Juneau Empire)

The common referral to Marine Passenger Fees includes a $5 per-passenger fee approved by local voters in 1999, a $3 port development fee and a $5 state commercial passenger vessel excise tax. A multiyear legal battle over the voter-approved passenger fees was resolved by a settlement in 2019 that is the focus of CLIA’s current objections.

Both Koester and Pierce responded in-kind to Reeve’s letters, with Koester stating the one she received “is late, inaccurate about funding for private docks, ignores the fact the CBJ communicated early and often with CLIA on these projects, and arbitrarily attacks long standing CBJ programs that are of great benefit to visitors.”

“I don’t think your member lines appreciate what a difficult situation this objection puts CBJ Administration in as we work with the public and the Assembly to give us time and trust in industry to negotiate fair and reasonable passenger limits instead of implementing unilateral policy changes without care for how it impacts your member lines,” she wrote. “CBJ has worked hard to maintain a collaborative relationship with industry, often at the criticism of the public.”

The Capital Transit funding was singled out by Koester among the items on CLIA’s list an example of how the money is being used as intended. There was a large increase in tourists riding the bus from downtown to a stop closest to the Mendenhall Glacier last year due to tour buses reaching capacity limits.

“Our bus drivers routinely had to leave local residents behind because the busses were too full of tourists,” she wrote. “Is CLIA really objecting to adding drivers to those routes and advocating for Capital Transit continuing to leave people trying to get to work, people in wheelchairs, the elderly and mothers with toddlers at bus stops?”

CLIA isn’t further contesting the list for the coming fiscal year, but does want changes in the future, Reeve wrote. She suggested CBJ submit its proposal for the next fiscal year on Jan. 15, with CLIA responding on Feb. 15 and the matter going to non-binding mediation if differences cannot be resolved through discussions.

“Please be aware that by continuing to work with the CBJ on fee use issues in an effort to reach consensus, we do not waive our objections or remedies, either now or in the future, regarding the fee uses to which we have objected,” she wrote. “We reserve all rights, including our continuing right to question or contest fee uses which we believe fall outside the applicable legal parameters and/or our settlement agreement with the CBJ.”

Assembly members debate how to spend this year’s fees

The dispute with CLIA became part of the debate by the Assembly’s Finance Committee on Wednesday when Alicia Hughes-Skandijs proposed eliminating the $300,000 in passenger fees allocated to the Franklin and AJ docks — which are privately owned — due to Reeve alleging in her letter to Pierce “there appears to be a reluctance to provide (Marine Passenger Fees) to private docks.”

“In the five years that I have been on the Assembly there has never been a year in the Marine Passenger Funds’ approval that went forward that we ever didn’t provide funding to the private docks,” Hughes-Skandijs said. However “when there is not the respect for the community needs or the respect for the role that we have as Assembly members to represent the community it causes me real pause.”

The motion was opposed by some other Assembly members who expressed concern about making the dispute with CLIA worse and because the access control security at private docks fulfills a public service.

“I am very concerned that this would plunge us into kind of a tit for tat when what we actually are trying to do is continue to improve our relations with CLIA,” Deputy Mayor Michelle Bonnet Hale said. “And with the cruise lines I think we’ve made huge progress since the days of the lawsuit. And we have to continue to make that progress.”

The motion failed 3-5 with Assembly members Christine Woll and Wáahlaal Gíidaak Barbara Blake voting in favor along with Hughes-Skandijs.

The biggest monetary dispute was over the proposed $4 million for the Capital Civic Center, originally envisioned years ago as combining elements of Centennial Hall and the Juneau Arts and Culture Center into a new facility at the site. However, voters in 2019 rejected a ballot proposition to increase the city’s hotel bed tax to partially fund the facility, and the current proposal envisions a replacement for the JACC that would connect to Centennial Hall.

A total of $8 million has been allocated so far toward the project, including $2 million for design work, $5 million contingent on securing federal funds toward the project and $1 million in passenger fees last year, Koester said. The project has a $40 million estimated total cost.

The $4 million request by The Partnership Inc., a nonprofit established to raise money for the civic center, is to boost those efforts by showing private and federal government entities there is a local commitment to the facility, Bob Banghart, executive director of the nonprofit, told Assembly members.

“At this juncture we’re anticipating a fairly successful summer season of grant funding coming through…so we would very much appreciate the opportunity to keep pushing this forward at an aggressive rate,” he said.

However, some Assembly members expressed concern when told by CBJ Finance Director Angie Flick a $4 million allocation would leave only $267,800 in the fund balance for Marine Passenger Fees after other items on the current list are included. Wade Bryson proposed reducing the allocation to $2 million, noting the Assembly has a five-year period that started last year to dedicate $10 million in Marine Passenger Fees toward the project.

“I want to support this project,” he said. “I want to put some money in the bank for it. But we also have five years. And so we don’t have to front-load it.”

Hale opposed the reduction, stating The Partnership has raised a substantial amount of funds so far and wants to ensure that continues. Ultimately a motion allocating $3 million toward the civic center — which Banghart said “would make a definite impression” on potential contributors when combined with other city funding — passed by a 6-2 vote with Woll and Hughes-Skandis opposed.

Among the other items on the Marine Passenger Fee list the Assembly approved are $2 million in debt service for the city’s cruise terminal docks, nearly $1.1 for police support, $662,700 for ambulance/EMS support, and about $530,000 to Travel Juneau for visitor information and crossing guard programs.

• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.

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